Simplified Tax Offence Compounding: New Guidelines Announced

The Central Board of Direct Taxes has unveiled new guidelines to simplify the compounding of offences under the Income-tax Act, 1961. These guidelines streamline processes, reduce complexities, and eliminate previous limitations, making the system more user-friendly for taxpayers. They also adjust compounding charges and rates to facilitate easier compliance.

The Central Board of Direct Taxes (CBDT) has introduced revamped guidelines designed to ease the compounding of offences under the Income-tax Act, 1961. As highlighted in a Ministry of Finance statement, these updates aim to streamline procedures and align with the Finance Minister's budget promise to simplify tax compliance.

Released on Thursday, the revised guidelines remove several complexities inherent in earlier systems. Notably, they omit the categorization of offences, allow unlimited applications for compounding, and permit reapplications after rectifying previous submission errors.

Significant changes include the removal of the 36-month filing limit for compounding applications and the relaxed requirement for companies and Hindu Undivided Families (HUFs), where the main accused no longer needs to submit the compounding application themselves. Additionally, compounding charges have been rationalized, abolishing interest charges for late payments and simplifying calculation methods.

(With inputs from agencies.)